The International Monetray Fund (IMF) is happy even if Sri Lanka and China negotiate independently so long as there is even-handed treatment in debt restructuring, IMF Senior Mission Chief for Sri Lanka Peter Breuer said.
“We took note of a tentative agreement between Sri Lanka and the Export-Import Bank of China and will analyze the details when we receive them. We urge all official creditors to move forward and agree on an appropriate debt treatment in line with the financing assurances they provided.”
Breur was speaking on October 20 at the Press Briefing of the First Review of Sri Lanka’s Extended Fund Facility Arrangement.When questioned about potential uneven treatment he later added, “The IMF is very sensitive to that question, whether countries are being treated in an even-handed manner, given the circumstances that they are in. And, of course, in Sri Lanka, we follow that principle as well. Indeed, we have a department, a Strategy, Policy and Review Department, that has one of its key missions to ensure even-handed treatment of countries and we follow that principle in Sri Lanka very closely.”
Commenting on another area he said, “Sri Lanka is a country with one of the lowest taxes in the world, and that was a key contributor to the crisis, especially when taxes were lowered even further in 2019, and then, shocks hit, the country couldn’t handle it. And so, that was a key contributor to the crisis. The program is all about addressing the root causes of the crisis. Raising revenue is a key element of it.”
Breuer expects additional taxes in the upcoming budget
“We are of course looking for a strong budget that can achieve that with of course the objective being that the gap between expenditures and revenues needs to be narrowed so that Sri Lanka can once again find creditors who are willing to finance the remaining gap,” he said.